The exchange rate and your dollar investments
Why a US stock investment rises or falls in pesos even if the stock does not move, what the implied exchange rate is and how to read the dollar's effect on this site.
2 min read · Jorge Avila Meléndez
When you buy US stocks from Mexico you pay in pesos, but what you buy is valued in dollars. So the value of your investment in pesos depends on two things: what the stock does and what the dollar does.
An example with numbers
You buy a $100 stock when the dollar is at 18 pesos: you pay 1,800 pesos.
| Scenario one year later | Price | Dollar | Value in pesos | Result in pesos |
|---|---|---|---|---|
| Stock unchanged, dollar rises | $100 | 20 | 2,000 | +11 % |
| Stock unchanged, dollar falls | $100 | 17 | 1,700 | −6 % |
| Stock up 10 %, dollar falls | $110 | 17 | 1,870 | +4 % |
That is why on this site every portfolio splits the gain into two parts: the stock effect and the exchange rate effect.
The implied exchange rate
When you buy on the SIC you do not see an explicit exchange rate: you only see the price in pesos. If you divide what you paid in pesos by the stock's price in dollars, you get the implied exchange rate of your purchase.
You paid 659.20 pesos for 4 shares that closed at $8.91 in the US: 659.20 ÷ (4 × 8.91) = 18.50 pesos per dollar.
That number includes the market exchange rate and whatever the brokerage charges or rounds. Viernes de Invertir calculates it for every purchase.
Investing in dollars as protection
The Mexican peso has gone through periods of strong depreciation against the dollar. Holding part of your savings in US assets works as protection: if the peso weakens, your investment is worth more pesos. But it also works the other way: when the peso strengthens, your investment grows less in pesos or even falls.
Buying every week also averages the dollar
Just as investing every week averages stock prices, it also averages the exchange rate: some weeks you buy with an expensive dollar and others with a cheap one. In the long run you do not have to guess when to change pesos into dollars.
What matters to get started
- Your US investment moves in pesos because of the stock and because of the dollar.
- The implied exchange rate tells you what you paid per dollar in each purchase.
- For taxes, the gain is calculated in pesos, so the dollar counts too. See taxes.